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On mandatory activation of welfare receivers

  • Dahlberg, Matz

    ()

    (Department of Economics, Uppsala University)

  • Johansson, Kajsa

    ()

    (Department of Economics, Uppsala University)

  • Mörk, Eva

    ()

    (IFAU - Institute for Labour Market Policy Evaluation)

This paper investigates whether mandatory activation programs for welfare receivers have effects on welfare participation, employment and disposable income. In contrast to earlier studies we are able to capture both entry and exit effects. The empirical analysis makes use of a Swedish welfare reform in which the city districts in Stockholm gradually implemented mandatory activation programs for individuals on welfare. The reform is well suited for investigating effects of such programs for several reasons. First, the reform was not combined with any other policy instruments, like time limits or tax credits, making sure that we will capture effects of mandatory activation policies and nothing else. Second, the reform was initiated at different points of time in different city districts, which ease identification. Third, using data from city districts within a single local labor market we can control for confounding macro economic shocks. Overall, we find that mandatory activation of welfare receivers reduce overall welfare participation and increases employment. We also find that mandatory activation programs appear to work best for young people and for people born in non-Western countries. For disposable income, we do not find a statistically significant effect.

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Paper provided by IFAU - Institute for Evaluation of Labour Market and Education Policy in its series Working Paper Series with number 2008:24.

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Length: 40 pages
Date of creation: 05 Nov 2008
Date of revision:
Handle: RePEc:hhs:ifauwp:2008_024
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  1. Barth, Erling & Bratsberg, Bernt & Raaum, Oddbjørn, 2003. "Local Unemployment and the Relative Wages of Immigrants: Evidence from the Current Population Surveys," Memorandum 20/2002, Oslo University, Department of Economics.
  2. Dan A. Black & Jeffrey A. Smith & Mark C. Berger & Brett J. Noel, 2003. "Is the Threat of Reemployment Services More Effective Than the Services Themselves? Evidence from Random Assignment in the UI System," American Economic Review, American Economic Association, vol. 93(4), pages 1313-1327, September.
  3. Stephen G. Donald & Kevin Lang, 2007. "Inference with Difference-in-Differences and Other Panel Data," The Review of Economics and Statistics, MIT Press, vol. 89(2), pages 221-233, May.
  4. Besley, Timothy & Coate, Stephen, 1992. "Workfare versus Welfare Incentive Arguments for Work Requirements in Poverty-Alleviation Programs," American Economic Review, American Economic Association, vol. 82(1), pages 249-61, March.
  5. Meyer, Bruce D. & Sullivan, James X., 2004. "The effects of welfare and tax reform: the material well-being of single mothers in the 1980s and 1990s," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1387-1420, July.
  6. Bruce D. Meyer & James X. Sullivan, 2003. "Measuring the Well-Being of the Poor Using Income and Consumption," NBER Working Papers 9760, National Bureau of Economic Research, Inc.
  7. Erling Barth & Bernt Bratsberg & Oddbj¯rn Raaum, 2004. "Identifying Earnings Assimilation of Immigrants under Changing Macroeconomic Conditions," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(1), pages 1-22, 03.
  8. Rebecca M. Blank, 2002. "Evaluating Welfare Reform in the United States," Journal of Economic Literature, American Economic Association, vol. 40(4), pages 1105-1166, December.
  9. Jeffrey Grogger & Steven J. Haider & Jacob Klerman, 2003. "Why Did the Welfare Rolls Fall During the 1990's? The Importance of Entry," American Economic Review, American Economic Association, vol. 93(2), pages 288-292, May.
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